Telefónica Group Regulatory Framework

In an era where corporate governance is under increasing scrutiny, Telefónica Group has established a comprehensive Regulatory Framework to guide its operations and ethical conduct. This framework serves as the cornerstone for the Group’s internal regulations, encompassing a wide range of areas from financial compliance to social responsibility.

Scope of application 

This corporate policy applies to Telefónica, S.A. and its majority-owned subsidiaries (collectively, the “Telefónica Group”). As the parent company, Telefónica, S.A. sets the foundation for coordination within the Group, respecting the autonomy of each entity. 

All internal regulations of the Group, spanning companies, regions, and business lines, must align with this Policy. However, legally mandated provisions, like statutes or board regulations, are exempt from this Policy. The Group follows the Responsible Business Principles as their main ethical guidelines, and this Policy does not govern them.

Internal regulatory framework

Types of regulatory provsions and their classification

In the delimitation of the Regulatory Framework of the Group, the Internal Regulations are classified according to several criteria: 

According to their organisational scope of application

• Corporate or group level: Establishes principles and criteria for the entire Group regarding organisation and conduct guidelines for all employees. 
• Region, country, territory, or business line level: Similar to corporate regulations but limited to a specific region, country, territory, or business line. 
• Company level: Regulations approved by the governing bodies of each company, applicable to its employees and possibly its subsidiaries. 

According to their regulatory rank

Hierarchically, the internal regulations will be classified in one of the following categories: 

• Policies: Determine basic principles that outline the Group’s action framework in a specific area. They set out general principles, objectives, and regulations. 
• Regulations: Rules of action and responsibilities for each organisational unit. They specify the tasks and their respective levels.
• Rules: Delve into practical and procedural aspects of the company’s activities. 
• Manuals: Detail the criteria or principles for a specific activity. 
• Instructions: Regulate provisions in other regulations, specifying their application to a specific operation or process. 
• Circulars: Regulate specific aspects of the internal organisation of a department, area, or work group. 

General principles of the internal regulations

• Hierarchy principle: Ensures that provisions do not contradict a higher-ranking provision. Corporate regulations take precedence over regional, country, organisation, territorial, and business line regulations. 
• Restricted and regulated possibility of exception: In exceptional cases, Group companies can alter corporate regulations. Any modification must be justified and approved by the coordinator of the regulation. 
• Minimum requirements nature: Regulations that affect multiple companies or the entire Group have a minimum (or sometimes maximum) requirements nature. Managers must adapt these regulations to their company’s specific needs. 

Competency in the elaboration of the internal regulations 

Party responsible for the internal regulation

The responsible party for the internal regulations assumes lots of functions, some of them are:  

• Lead the proposal, creation, communication, and implementation of the Internal Regulation. They also monitor, evaluate, and update them. 
• Identify and analyse opportunities for improvement or modification of existing Internal Regulations and detect new regulatory needs. 
• Collaborate with the Internal Regulations Coordinator to define work teams for new or existing regulations. 
• Analyse the impacts of new regulations or modifications to existing ones. 
• Manage the approval of the Internal Regulation by the appropriate body or directorate. 
• Promote and manage updates to the Internal Regulations when deficiencies are detected or when organisational changes render them obsolete. 

Internal regulations coordinator

Some of the responsibilities of this role are: 

• The coordination of the Telefónica Group’s Internal Regulatory Framework is overseen by the Internal Audit Directorate. 
• Detect needs for improvement, modification, or updating of existing Internal Regulations. 
• Provide support and advice during the drafting and implementation of the Internal Regulations. 
• Collaborate in assigning work teams for updates and send drafts to affected areas for comments. 
• Supervise updates to ensure they align with the present Policy and support the approval process. 
• Assist in clarifying queries about the interpretation of the Internal Regulations and resolve inconsistencies. 
• Update the single repository with the Corporate Internal Regulations available through the Global Intranet. 

Internal Regulations Elaborating Process

Proposal

Any department or unit within Telefónica, S.A. or its Group Companies can propose the creation or review of an internal regulation. If multiple departments are affected by a regulation, they must jointly propose changes. The responsible party will prepare a proposal, training plan, and an impact analysis with the support of the internal regulations Coordinator. 

Creation / updates of internal regulations

A work team will be identified to prepare the proposal. If the regulations affect multiple Group Companies, the text must be consulted with the affected parties. The draft will be analysed for consistency with the Group’s regulatory map.

Approval of internal regulations

Approval depends on the scope and rank of the regulations. The Board of Directors of the Telefónica Group approves policies, while the Board of Directors or the relevant Executive Committee member approves regulations. The relevant Directorate approves lower-ranking regulations.

Modification and repeal of internal regulations 

Changes or repeals are the responsibility of the body or directorate that approved them. The amendment process involves the Responsible Party and the Internal Regulations Coordinator. 

Publication and communication of the internal regulations 

Upon a new Internal Regulation’s approval, it’s shared with relevant employees, who must understand and follow it. The Party Responsible oversees this communication, with potential support from Human Resources. All regulations are available on the Group’s Global Intranet, maintained by the Coordinator. 

All the Internal Regulations that make up the Regulatory Framework of the Telefónica Group are mandatory for all Group employees, each of which is applicable within the scope of their respective functions and competencies. You can see more information in the document below: